How the net pay works

Summary

The Umana net pay calculator reads the gross pay and calculates a temporary net pay, taking deductions for benefits and taxes.

• This temporary pay can be recalculated as often as needed until it is finalized.

The net pay calculator can be invoked from the pay calculation wizard, as as well as from the employee's net pay and gross pay windows.

Annual tax changes

The federal and provincial governments adjust the tax rates and sometimes the calculation formulas each year.

• Most of these are the same for all employers (varying by province).

  Umana delivers a new DEDSTATyyyy (yyyy = the year) each year with the new rules, rates, and formulas.

• Some of these are employer specific. In particular (federally) your reduced E.I. rate, and (provincially) Worker Compensation Board rates (CNESST, WSIB, WCB, ...).

  Rates are based on your company's history, so you will have to enter manually, since they are unique to your company.

See Year-End process

Calculation process, step-by-step

For each employee, the net pay calculation engine performs these steps

1. Reads and summarized (by pay code) unpaid (unfinalized) gross pay transactions
2. Calculates benefits (group 1 – benefits which are paid out or might affect bank entitlement)
3. Calculates any per-pay bank entitlement
4. Calculates other benefits (group 2)
5. Calculates statutory deductions (taxes & employer contibutions)
6. If the net pay resulting negative, goes back and removes benefit deductions until net is no longer negative.

Dependencies

Doesn't look right? The payroll calculation depends on many other bits of information about the employee and the company. If those are wrong, the payroll calculation will be wrong.

• Employee status: Active, ALD, etc.
• Employee earnings
• Employee payroll info
• Employee benefits
• DEDSTAT and company-specific tax rates